When you think about the Williams Sonoma name, the brand, Williams Sonoma, you think about how small it is, and the consolidation of the industry and with Bed Bath & Beyond closing its retail footprint and others going out of business, and not seeing anyone deliver on exclusive proprietary products for high-end kitchen, you can see what a tremendous opportunity we have. And with that also, we have Williams Sonoma Home, which sits in that higher-end space where there’s not many, particularly in the aesthetics that we’re serving. I actually have Felix sitting right next to me. And I — we invited him today because we’re upon the very large holiday season that we’re looking forward to. And as you know, Williams Sonoma really spikes during the holiday season.
And so, Felix, do you want to make a few comments about how you see your brand gaining market share in the future?
Felix Carbullido: Sure. I don’t want to give away too much of our winning formula. But, it includes curating the best products out there, right, inspiring customers how to use it, offering it in their channel of choice, whether it be online or in-store. I think some houseware brands offer products that don’t inspire, and some inspire but don’t have 150-plus stores and a great website to purchase from. As Jeff said, our beautiful stores, our well trained and passionate store associates, our inspiring catalog and our multidimensional website are competitive advantages, I don’t think anyone really has. And as we head into the fourth quarter, this is the time that we celebrate the most. We have Thanksgiving, Hanukkah, Christmas, New Year’s Eve, these are reasons for people to come visit our stores.
And I think we’ve pulled together the best assortment of gifts and holiday décor that we have had. So, we’re excited, and we want to continue to gain market share, and all indicators are that in the kitchen business, it appears we are.
Laura Alber: And then as you look at our other brands, both the big ones, both West Elm and Pottery Barn, we have shown this year that there’s areas within each brand that are very underdeveloped and where there’s sizable opportunity from accessible furniture for Pottery Barn and dorm to — in West Elm, filling out the modern accessory textile piece, which we haven’t addressed and also more modern seasonal assortments. That is a big opportunity and one that has never been built. So we see us being able to pick up share in those two brands in specific categories. And of course, the temporary furniture pullback is just that. This, too, shall reverse. And the great news is that we won’t have built our business or held it up with promotions like others are at this time.
That is getting out of our base. And it’s going to continue to allow us to focus on delivering proprietary products and not just thinking about markdowns all the time, but thinking about how to build better collaborations and more relevant product lines that the customer loves. The last thing I’ll just say is, we’ve talked about B2B, it’s across all brands. It’s a big driver of market share for us because nobody is doing what we’re doing. And so, it’s a very, very large industry and we’re still scratching the surface. And we are still — as Josie, who runs it, likes to say, we are still doing more gathering than hunting. And we have a lot more that we can do as we continue to build this muscle. So, we’re excited about the growth algorithm for the future.
And we do recognize that it’s been softer than expected this year, particularly in furniture, but we’re completely focused on that growth posture looking out into the future.
Max Rakhlenko: That’s great. Super helpful. And Jeff, I have to ask you a margin question. But when we think about the updated margin guidance, is there anything in it that makes you think that you can at least hold it as we think ahead, especially once you start to leverage fixed expenses on top line growth?
Jeff Howie: As I said in the answer to Chuck’s question on gross margin, we anticipate that the results we saw in Q4, the tailwinds I’ve been talking about, will continue — I’m sorry, the results we saw in Q3, the tailwinds I’ve been talking about will continue into Q4. These are pretty strong tailwinds. I talked about the impact of ocean freight, our supply chain efficiencies and our full price selling. While we’re talking about guidance, I also want to just point out that while we don’t guide specific lines, in last year’s Q4, our SG&A materially benefited from some large favorable items we recorded that we don’t anticipate reoccurring this year. But, here is the key takeaway, it’s all contemplated in our guidance, which we’ve raised our full year outlook for implied EPS.
Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.
Unidentified Analyst: Hi. This is Zach on for Simeon. Thanks for taking our questions. On your view for top line, do you think this year will be the bottom? Your updated guidance implies an underlying deceleration in the fourth quarter across stacks. So, do you think that the trends could inflect in ‘24? Thanks.
Jeff Howie: We’ll talk more about next year after we get through the really important holiday season. Right now, that’s where our focus is. And as Laura just touched on, our primary objective in ‘24 will be to drive both growth and margin, and we’ll balance the macroeconomic certainty with our long-term growth potential. But we’ll talk more about that in March.
Operator: Our next question will come from the line of Anthony Chukumba with Loop Capital Markets. Please go ahead.
Anthony Chukumba: Let me add my congratulations as well on the strong profitability. So, you talked about introducing a larger offering of new products at mid-tier and lower price points. And then, you talked specifically about Pottery Barn introducing some of those products. I guess, just two questions related. Are there any other brands that have — where you’ve introduced those mid- and lower-tier products? And then, how do the merchandise, the selling margins on those products compare to some of your higher price point offerings? Thank you.
